Expedia Group, Inc. (NASDAQ: EXPE) announced financial results today for the third quarter ended September 30, 2022.

"The third quarter marked another period of robust travel demand despite the uncertain macroeconomic environment. We delivered strong financial performance with record quarterly revenue and adjusted EBITDA, which exceeded $1 billion for the first time. These results reflect our emphasis on driving topline growth while improving margins," said Peter Kern, Vice Chairman and CEO, Expedia Group. "Our active loyalty members and active app users are at all-time highs, reflecting our ongoing focus on enhancing our products, technology and consumer offerings to drive greater engagement with our travelers and a more direct and valuable base of business."

Key Highlights

  • Record quarterly revenue and third quarter lodging bookings.
  • Net income up 33% against 2021 and record adjusted EBITDA.
  • Free cash flow for the first nine months of 2022 was $3.1 billion, more than double 2019 levels.
  • Resumed share buybacks with 2 million shares repurchased through October for approximately $200 million.
  • Retired $500 million of debt, resulting in cumulative debt and preferred equity reduction of over $3.4 billion over the past 18 months.

Financial Summary & Operating Metrics ($ millions except per share amounts)(1)

 

Expedia Group, Inc.

Metric

Q3 2022

Q3 2021

Δ Y/Y

Booked room nights

81.6

65.4

25%

Stayed room nights

93.2

77.8

20%

Gross bookings

$23,987

$18,725

28%

Revenue

3,619

2,962

22%

Operating income

747

524

42%

Net income attributable to Expedia Group common stockholders

482

362

33%

Diluted earnings per share

$2.98

$2.26

32%

Adjusted EBITDA(2)

1,079

855

26%

Adjusted net income(2)

640

553

16%

Adjusted EPS(2)

$4.05

$3.53

15%

Net cash used in operating activities

(997)

(1,221)

(18)%

Free cash flow(2)

(1,167)

(1,400)

(17)%

 

(1)All comparisons are against comparable period of 2021 unless otherwise noted

(2)"Adjusted EBITDA" (Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization), "Adjusted net income (loss)," "Adjusted EPS" and "Free cash flow" are non-GAAP measures as defined by the Securities and Exchange Commission (the "SEC"). See "Definitions of Non-GAAP Measures" and "Tabular Reconciliations for Non-GAAP Measures" on pages 11-18 herein for an explanation and reconciliation of non-GAAP measures used throughout this release. Expedia Group does not calculate or report net income by segment.

Discussion of Results

The results for Expedia Group, Inc. ("Expedia Group" or "the Company") include Brand Expedia®, Hotels.com®, Expedia® Partner Solutions, Vrbo®, Egencia®, trivago®, HomeAway®, Orbitz®, Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media Solutions, CarRentals.com™, Expedia® Cruises™, and Traveldoo®. Results include the related international points of sale for all brands. In April 2021, we completed the sale of Classic Vacations®, and in November 2021 we completed the sale of Egencia®, which is included in results through the date of its sale. All amounts shown are in U.S. dollars.

Gross Bookings & Revenue

Gross Bookings & Revenue by Segment ($ millions)

 

 

Gross Bookings

 

Third Quarter

 

2022

 

2021

 

Δ%

Gross Bookings

$

23,987

 

 

$

18,725

 

 

28%

 

 

 

 

 

 

 

Revenue

 

Third Quarter

 

2022

 

2021

 

Δ%

Retail

$

2,707

 

 

$

2,351

 

 

15%

B2B

 

788

 

 

 

490

 

 

61%

Expedia Group (excluding trivago)

$

3,495

 

 

$

2,841

 

 

23%

trivago

 

185

 

 

 

163

 

 

13%

Intercompany eliminations

 

(61

)

 

 

(42

)

 

47%

Total

$

3,619

 

 

$

2,962

 

 

22%

For the third quarter of 2022, total gross bookings increased 28%, compared to the third quarter of 2021, as gross bookings for lodging, air, and other travel products grew as travel demand recovered.

Total revenue increased 22% as Retail, B2B, and trivago segments revenue all increased compared to the third quarter of 2021.

Product & Services Detail

Revenue by Service Type ($ millions)

 

 

Revenue

 

Third Quarter

 

2022

 

2021

 

Δ%

Lodging

$

2,881

 

$

2,300

 

25%

Air

 

100

 

 

 

61

 

 

61%

Advertising and media

 

222

 

 

 

202

 

 

10%

Other

 

416

 

 

 

399

 

 

4%

Total

$

3,619

 

 

$

2,962

 

 

22%

As a percentage of total revenue in the third quarter of 2022, lodging accounted for 80%, advertising and media accounted for 6%, air accounted for 3%, and all other revenues accounted for the remaining 11%.

Lodging revenue increased 25% in the third quarter of 2022, compared to the third quarter of 2021, driven by a 20% growth in stayed room nights and a 4% increase in stayed average daily rates ("ADRs").

Air revenue increased 61% in the third quarter of 2022, compared to the third quarter of 2021, primarily driven by 69% growth in revenue per air ticket.

Advertising and media revenue increased 10% in the third quarter of 2022, compared to the third quarter of 2021, driven by growth in Expedia Group Media Solutions. Other revenue increased 4% in the third quarter of 2022, driven by growth from travel insurance products.

Costs and Expenses ($ millions)

 

Costs and Expenses

 

 

As a % of Revenue

 

Third Quarter

 

 

Third Quarter

 

2022

 

2021

 

Δ%

 

 

2022

 

2021

 

Δ (bps)

Generally Accepted Accounting Principles (GAAP) Expenses - Expedia Group

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

$

455

 

$

442

 

3

%

 

 

12.6

%

 

14.9

%

 

(233

)

Selling and marketing - direct

 

1,504

 

 

 

1,132

 

 

33

%

 

 

41.6

%

 

38.2

%

 

337

 

Selling and marketing - indirect

 

165

 

 

 

182

 

 

(10

)%

 

 

4.5

%

 

6.1

%

 

(161

)

Selling and marketing

 

1,669

 

 

 

1,314

 

 

27

%

 

 

46.1

%

 

44.3

%

 

176

 

Technology and content

 

310

 

 

 

277

 

 

12

%

 

 

8.6

%

 

9.4

%

 

(81

)

General and administrative

 

187

 

 

 

182

 

 

2

%

 

 

5.2

%

 

6.2

%

 

(101

)

Total GAAP costs and expenses

$

2,621

 

 

$

2,215

 

 

18

%

 

 

72.4

%

 

74.8

%

 

(238

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Expenses - Expedia Group

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue*

$

451

 

 

$

436

 

 

4

%

 

 

12.5

%

 

14.7

%

 

(223

)

Selling and marketing - direct

 

1,504

 

 

 

1,132

 

 

33

%

 

 

41.6

%

 

38.2

%

 

337

 

Selling and marketing - indirect*

 

147

 

 

 

153

 

 

(4

)%

 

 

4.0

%

 

5.2

%

 

(112

)

Selling and marketing*

 

1,651

 

 

 

1,285

 

 

28

%

 

 

45.6

%

 

43.4

%

 

224

 

Technology and content*

 

282

 

 

 

245

 

 

15

%

 

 

7.8

%

 

8.3

%

 

(50

)

General and administrative*

 

140

 

 

 

133

 

 

4

%

 

 

3.8

%

 

4.5

%

 

(65

)

Total adjusted costs and expenses

$

2,524

 

 

$

2,099

 

 

20

%

 

 

69.7

%

 

70.9

%

 

(113

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Total overhead expenses**

$

569

 

 

$

531

 

 

7

%

 

 

15.7

%

 

17.9

%

 

(227

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Expenses - Expedia Group (excluding trivago)***

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue*

$

446

 

 

$

430

 

 

4

%

 

 

12.8

%

 

15.2

%

 

(237

)

Selling and marketing*

 

1,583

 

 

 

1,205

 

 

31

%

 

 

45.3

%

 

42.4

%

 

288

 

Technology and content*

 

271

 

 

 

233

 

 

16

%

 

 

7.7

%

 

8.2

%

 

(49

)

General and administrative*

 

133

 

 

 

127

 

 

5

%

 

 

3.8

%

 

4.4

%

 

(66

)

Total adjusted costs and expenses excluding trivago

$

2,433

 

 

$

1,995

 

 

22

%

 

 

69.6

%

 

70.3

%

 

(64

)

 

Note: Some numbers may not add due to rounding.

*Adjusted expenses are non-GAAP measures. See pages 11-18 herein for a description and reconciliation to the corresponding GAAP measures.

**Total overhead expenses is the sum of adjusted expenses for Selling and marketing - indirect, Technology and content, and General and administrative.

***Expedia Group (excluding trivago) figures exclude both trivago costs and expenses and trivago revenue when calculating 'As a % of Revenue.'

Cost of Revenue

  • For the third quarter of 2022, total GAAP and adjusted cost of revenue increased 3% and 4%, respectively, compared to the third quarter of 2021, driven by higher merchant processing fees and cloud costs as a result of increased transaction volume which offset lower personnel costs related to the sale of Egencia in November 2021.

Selling and Marketing

  • For the third quarter of 2022, total GAAP and adjusted selling and marketing expense increased 27% and 28%, respectively, compared to the third quarter of 2021, primarily due to a $372 million increase in direct costs driven by an increase in B2B partner commissions, as well as increased spend in Retail marketing channels. Total GAAP and adjusted indirect selling and marketing expenses, decreased 10% and 4%, respectively compared to the third quarter of 2021. The decrease in indirect marketing expense was driven by lower personnel costs related to the sale of Egencia in November 2021. The year-over-year decrease in GAAP indirect costs was driven by lower stock-based compensation.

Technology and Content

  • For the third quarter of 2022, total GAAP and adjusted technology and content expense increased 12% and 15%, respectively, compared to the third quarter of 2021, due to an increase in personnel costs from increased headcount.

General and Administrative

  • For the third quarter of 2022, total GAAP and adjusted general and administrative expense increased 2% and 4%, respectively, compared to the third quarter of 2021, due to an increase in personnel costs from increased headcount.

Net Income (Loss) Attributable to Expedia Group and Adjusted EBITDA*

Adjusted EBITDA by Segment ($ millions)

 

 

Third Quarter

 

2022

 

2021

 

Δ%

Retail

$

943

 

 

$

879

 

 

7%

B2B

 

221

 

 

 

74

 

 

198%

Unallocated overhead costs

 

(119

)

 

 

(116

)

 

3%

Expedia Group (excluding trivago)

$

1,045

 

 

$

837

 

 

25%

trivago(1)

 

34

 

 

 

18

 

 

85%

Total Adjusted EBITDA

$

1,079

 

 

$

855

 

 

26%

 

 

 

 

 

 

Net income attributable to Expedia Group common stockholders(2)

$

482

 

 

$

362

 

 

33%

 

(1) trivago is a separately listed company on the Nasdaq Global Select Market and, therefore, is subject to its own reporting and filing requirements which could result in possible differences that are not expected to be material to Expedia Group.

(2) Expedia Group does not calculate or report net income (loss) by segment.

* Adjusted EBITDA is a non-GAAP measure. See pages 11-18 herein for a description and reconciliation to the corresponding GAAP measures.

Note: Some numbers may not add due to rounding.

Depreciation and Amortization

Depreciation and amortization decreased 1% in the third quarter of 2022, compared to the third quarter of 2021.

Interest and Other

Consolidated interest income increased $18 million in the third quarter of 2022 compared to the third quarter of 2021, as a result of higher rates of return. Consolidated interest expense decreased $23 million in the third quarter of 2022, as a result of lower interest expense related to the early redemption of senior notes in the first nine months of 2022.

Consolidated other, net was a loss of $87 million in the third quarter of 2022, primarily driven by mark-to-market losses on minority equity investments in American Express Global Business Travel ("GBT") and Despegar compared to a gain of $25 million in the third quarter of 2021, in which we recognized a gain related to the sale of the Alice business.

Income Taxes

The GAAP effective tax rate was a 31% expense on a pre-tax income in the third quarter of 2022, compared to a 19% expense on pre-tax income in the third quarter of 2021. The change in the effective tax rate was primarily due primarily due to nondeductible mark-to-market adjustments to our minority equity investments as well as other discrete items

The effective tax rate on pretax adjusted net income was 24% in the third quarter of 2022, compared to 2% in the third quarter of 2021. The change in effective tax rate was primarily due to the increase in pretax adjusted net income and discrete items.

Balance Sheet, Cash Flows and Capitalization

For the three months ended September 30, 2022, consolidated net cash used in operating activities was approximately $1.0 billion. Consolidated free cash flow totaled negative $1.2 billion, compared to negative $1.4 billion in the prior year, primarily due to an improvement in adjusted EBITDA.

Cash, cash equivalents and short-term investments totaled $4.6 billion at September 30, 2022 compared to $4.3 billion at December 31, 2021. Restricted cash and cash equivalents, which primarily consist of traveler deposits for Vrbo bookings, was $1.8 billion at September 30, 2022 compared to $1.7 billion at December 31, 2021. Prepaid expenses and other current assets was $799 million at September 30, 2022 compared to $827 million at December 31, 2021.

Deferred merchant bookings totaled approximately $7.5 billion at September 30, 2022, including approximately $915 million in deferred loyalty rewards compared to $5.7 billion at December 31, 2021, including approximately $800 million in deferred loyalty rewards.

As of September 30, 2022, Expedia Group had stock-based awards outstanding representing approximately 11 million shares of Expedia Group common stock, consisting of approximately 7 million restricted stock units ("RSUs") and performance share units ("PSUs") in addition to stock options to purchase approximately 4 million shares of common stock with a weighted average exercise price of $135.22 and weighted average remaining life of 3.6 years.

On September 13, 2022, Expedia Group redeemed $500 million of outstanding aggregate principal of the Company's 2.95% Notes due 2031. As a result of these redemptions, we recognized a gain on debt extinguishment of $73 million in the quarter.

During the quarter ended September 30, 2022, Expedia Group repurchased 1.5 million shares of Expedia Group common stock for an aggregate purchase price of $153 million excluding transaction costs (an average of $100.07 per share). As of September 30, 2022, there were approximately 21.8 million shares remaining under the 2018 and 2019 repurchase authorizations. Subsequent to the end of the third quarter of 2022, Expedia Group repurchased an additional 0.5 million shares for a total cost of $47 million excluding transaction costs (an average of $95.65 per share).

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, except share and per share data)

(Unaudited)

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

 

 

Revenue

$

3,619

 

 

$

2,962

 

 

$

9,049

 

 

$

6,319

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenue (exclusive of depreciation and amortization shown separately below) (1)

 

455

 

 

 

442

 

 

 

1,245

 

 

 

1,127

 

Selling and marketing (1)

 

1,669

 

 

 

1,314

 

 

 

4,724

 

 

 

3,177

 

Technology and content (1)

 

310

 

 

 

277

 

 

 

864

 

 

 

800

 

General and administrative (1)

 

187

 

 

 

182

 

 

 

562

 

 

 

522

 

Depreciation and amortization

 

199

 

 

 

201

 

 

 

593

 

 

 

615

 

Impairment of intangible assets

 

52

 

 

 

 

 

 

81

 

 

 

 

Legal reserves, occupancy tax and other

 

 

 

 

10

 

 

 

23

 

 

 

1

 

Restructuring and related reorganization charges

 

 

 

 

12

 

 

 

 

 

 

54

 

Operating income

 

747

 

 

 

524

 

 

 

957

 

 

 

23

 

Other income (expense):

 

 

 

 

 

 

 

Interest income

 

20

 

 

 

2

 

 

 

33

 

 

 

5

 

Interest expense

 

(63

)

 

 

(86

)

 

 

(217

)

 

 

(267

)

Gain (loss) on debt extinguishment, net

 

73

 

 

 

 

 

 

49

 

 

 

(280

)

Other, net

 

(87

)

 

 

25

 

 

 

(467

)

 

 

10

 

Total other expense, net

 

(57

)

 

 

(59

)

 

 

(602

)

 

 

(532

)

Income (loss) before income taxes

 

690

 

 

 

465

 

 

 

355

 

 

 

(509

)

Provision for income taxes

 

(214

)

 

 

(87

)

 

 

(187

)

 

 

129

 

Net income (loss)

 

476

 

 

 

378

 

 

 

168

 

 

 

(380

)

Net (income) loss attributable to non-controlling interests

 

6

 

 

 

(2

)

 

 

7

 

 

 

6

 

Net income (loss) attributable to Expedia Group, Inc.

 

482

 

 

 

376

 

 

 

175

 

 

 

(374

)

Preferred stock dividend

 

 

 

 

(14

)

 

 

 

 

 

(64

)

Loss on redemption of preferred stock

 

 

 

 

 

 

 

 

 

 

(107

)

Net income (loss) attributable to Expedia Group, Inc. common stockholders

$

482

 

 

$

362

 

 

$

175

 

 

$

(545

)

 

 

 

 

 

 

 

 

Earnings (loss) per share attributable to Expedia Group, Inc. available to common stockholders

 

 

 

 

 

 

 

Basic

$

3.05

 

 

$

2.40

 

 

$

1.11

 

 

$

(3.67

)

Diluted

 

2.98

 

 

 

2.26

 

 

 

1.08

 

 

 

(3.67

)

Shares used in computing earnings (loss) per share (000's):

 

 

 

 

 

 

 

Basic

 

157,628

 

 

 

151,019

 

 

 

157,100

 

 

 

148,453

 

Diluted

 

161,829

 

 

 

160,460

 

 

 

162,495

 

 

 

148,453

 

 

 

 

 

 

 

 

 

(1) Includes stock-based compensation as follows:

 

 

 

 

 

 

 

Cost of revenue

$

4

 

 

$

6

 

 

$

10

 

 

$

17

 

Selling and marketing

 

18

 

 

 

29

 

 

 

50

 

 

 

78

 

Technology and content

 

28

 

 

 

32

 

 

 

82

 

 

 

91

 

General and administrative

 

47

 

 

 

49

 

 

 

138

 

 

 

133

 

EXPEDIA GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except number of shares which are reflected in thousands and par value)

 

 

September 30, 2022

 

December 31, 2021

 

(Unaudited)

 

 

ASSETS

Current assets:

 

 

 

Cash and cash equivalents

$

4,588

 

 

$

4,111

 

Restricted cash and cash equivalents

 

1,778

 

 

 

1,694

 

Short-term investments

 

49

 

 

 

200

 

Accounts receivable, net of allowance of $61 and $65

 

1,991

 

 

 

1,264

 

Income taxes receivable

 

65

 

 

 

85

 

Prepaid expenses and other current assets

 

799

 

 

 

827

 

Total current assets

 

9,270

 

 

 

8,181

 

Property and equipment, net

 

2,169

 

 

 

2,180

 

Operating lease right-of-use assets

 

360

 

 

 

407

 

Long-term investments and other assets

 

1,122

 

 

 

1,450

 

Deferred income taxes

 

626

 

 

 

766

 

Intangible assets, net

 

1,223

 

 

 

1,393

 

Goodwill

 

7,109

 

 

 

7,171

 

TOTAL ASSETS

$

21,879

 

 

$

21,548

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

 

 

 

Accounts payable, merchant

$

1,535

 

 

$

1,333

 

Accounts payable, other

 

1,132

 

 

 

688

 

Deferred merchant bookings

 

7,457

 

 

 

5,688

 

Deferred revenue

 

160

 

 

 

166

 

Income taxes payable

 

46

 

 

 

16

 

Accrued expenses and other current liabilities

 

789

 

 

 

824

 

Current maturities of long-term debt

 

 

 

 

735

 

Total current liabilities

 

11,119

 

 

 

9,450

 

Long-term debt, excluding current maturities

 

6,237

 

 

 

7,715

 

Deferred income taxes

 

50

 

 

 

58

 

Operating lease liabilities

 

315

 

 

 

360

 

Other long-term liabilities

 

445

 

 

 

413

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Common stock: $.0001 par value; Authorized shares: 1,600,000

 

 

 

 

 

Shares issued: 277,607 and 274,661; Shares outstanding: 150,966 and 150,125

 

 

 

Class B common stock: $.0001 par value; Authorized shares: 400,000

 

 

 

 

 

Shares issued: 12,800 and 12,800; Shares outstanding: 5,523 and 5,523

 

 

 

Additional paid-in capital

 

14,674

 

 

 

14,229

 

Treasury stock - Common stock and Class B, at cost; Shares 133,917 and 131,813

 

(10,503

)

 

 

(10,262

)

Retained earnings (deficit)

 

(1,586

)

 

 

(1,761

)

Accumulated other comprehensive income (loss)

 

(317

)

 

 

(149

)

Total Expedia Group, Inc. stockholders’ equity

 

2,268

 

 

 

2,057

 

Non-redeemable non-controlling interests

 

1,445

 

 

 

1,495

 

Total stockholders’ equity

 

3,713

 

 

 

3,552

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

21,879

 

 

$

21,548

 

EXPEDIA GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Nine months ended

September 30,

 

2022

 

2021

Operating activities:

 

 

 

Net income (loss)

$

168

 

 

$

(380

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation of property and equipment, including internal-use software and website development

 

527

 

 

 

538

 

Amortization of intangible assets

 

66

 

 

 

77

 

Impairment of intangible assets

 

81

 

 

 

 

Amortization of stock-based compensation

 

280

 

 

 

319

 

Deferred income taxes

 

106

 

 

 

(158

)

Foreign exchange loss on cash, restricted cash and short-term investments, net

 

193

 

 

 

76

 

Realized loss on foreign currency forwards

 

170

 

 

 

21

 

Loss on minority equity investments, net

 

423

 

 

 

7

 

(Gain) loss on debt extinguishment, net

 

(49

)

 

 

280

 

Other, net

 

(26

)

 

 

(33

)

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(748

)

 

 

(781

)

Prepaid expenses and other assets

 

31

 

 

 

(190

)

Accounts payable, merchant

 

202

 

 

 

663

 

Accounts payable, other, accrued expenses and other liabilities

 

427

 

 

 

238

 

Tax payable/receivable, net

 

6

 

 

 

7

 

Deferred merchant bookings

 

1,770

 

 

 

2,787

 

Deferred revenue

 

(5

)

 

 

(8

)

Net cash provided by operating activities

 

3,622

 

 

 

3,463

 

Investing activities:

 

 

 

Capital expenditures, including internal-use software and website development

 

(485

)

 

 

(530

)

Purchases of investments

 

(60

)

 

 

(1

)

Sales and maturities of investments

 

200

 

 

 

23

 

Proceeds from initial exchange of cross-currency interest rate swaps

 

337

 

 

 

 

Payments for initial exchange of cross-currency interest rate swaps

 

(337

)

 

 

 

Other, net

 

(169

)

 

 

2

 

Net cash used in investing activities

 

(514

)

 

 

(506

)

Financing activities:

 

 

 

Proceeds from issuance of long-term debt, net of issuance costs

 

 

 

 

1,964

 

Payment of long-term debt

 

(2,141

)

 

 

(1,706

)

Debt extinguishment costs

 

(22

)

 

 

(258

)

Redemption of preferred stock

 

 

 

 

(618

)

Purchases of treasury stock

 

(241

)

 

 

(108

)

Payment of preferred stock dividends

 

 

 

 

(50

)

Proceeds from exercise of equity awards and employee stock purchase plan

 

125

 

 

 

421

 

Other, net

 

34

 

 

 

4

 

Net cash used in financing activities

 

(2,245

)

 

 

(351

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents

 

(302

)

 

 

(126

)

Net increase in cash, cash equivalents and restricted cash and cash equivalents

 

561

 

 

 

2,480

 

Cash, cash equivalents and restricted cash and cash equivalents at beginning of period

 

5,805

 

 

 

4,138

 

Cash, cash equivalents and restricted cash and cash equivalents at end of period

$

6,366

 

 

$

6,618

 

Supplemental cash flow information

 

 

 

Cash paid for interest

$

254

 

 

$

298

 

Income tax payments, net

 

71

 

 

 

15

 

Expedia Group, Inc.

Trended Metrics

(All figures in millions)

 

The supplemental metrics below are intended to supplement the financial statements in this release and in our filings with the SEC, and do not include adjustments for one-time items, acquisitions, foreign exchange or other adjustments. The definition, methodology and appropriateness of any of our supplemental metrics are subject to removal and/or change, and such changes could be material. In the event of any discrepancy between any supplemental metric and our historical financial statements, you should rely on the information filed with the SEC and the financial statements in our most recent earnings release.

 

 

 

 

2019

 

 

 

2020

 

 

 

2021

 

 

 

2022

 

 

 

Y/Y

 

 

 

 

 

Q1

Q2

Q3

Q4

 

 

 

Q1

Q2

Q3

Q4

 

 

 

Q1

Q2

Q3

Q4

 

 

 

Q1

Q2

Q3

 

 

 

Growth

 

 

Gross bookings by business model

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

$

17,352

 

$

16,112

 

$

14,585

 

$

11,956

 

 

 

 

$

9,823

 

$

1,363

 

$

3,530

 

$

3,405

 

 

 

 

$

6,737

 

$

10,362

 

$

8,855

 

$

8,325

 

 

 

 

$

11,346

 

$

12,773

 

$

10,904

 

 

 

 

23%

 

 

Merchant

 

 

 

12,057

 

 

12,180

 

 

12,342

 

 

11,289

 

 

 

 

 

8,062

 

 

1,350

 

 

5,101

 

 

4,162

 

 

 

 

 

8,685

 

 

10,453

 

 

9,870

 

 

9,138

 

 

 

 

 

13,066

 

 

13,366

 

 

13,083

 

 

 

 

33%

 

 

Total

 

 

$

29,409

 

$

28,292

 

$

26,927

 

$

23,245

 

 

 

 

$

17,885

 

$

2,713

 

$

8,631

 

$

7,567

 

 

 

 

$

15,422

 

$

20,815

 

$

18,725

 

$

17,463

 

 

 

 

$

24,412

 

$

26,139

 

$

23,987

 

 

 

 

28%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

$

1,901

 

$

2,333

 

$

2,613

 

$

1,961

 

 

 

 

$

1,582

 

$

463

 

$

1,246

 

$

702

 

 

 

 

$

1,025

 

$

1,715

 

$

2,351

 

$

1,730

 

 

 

 

$

1,740

 

$

2,420

 

$

2,707

 

 

 

 

15%

 

 

B2B

 

 

 

556

 

 

657

 

 

731

 

 

635

 

 

 

 

 

485

 

 

68

 

 

203

 

 

186

 

 

 

 

 

184

 

 

305

 

 

490

 

 

481

 

 

 

 

 

432

 

 

650

 

 

788

 

 

 

 

61%

 

 

Corporate (Bodybuilding.com)

 

 

 

 

 

 

 

24

 

 

34

 

 

 

 

 

39

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NM

 

 

Expedia Group (excluding trivago)

 

 

$

2,457

 

$

2,990

 

$

3,368

 

$

2,630

 

 

 

 

$

2,106

 

$

551

 

$

1,449

 

$

888

 

 

 

 

$

1,209

 

$

2,020

 

$

2,841

 

$

2,211

 

 

 

 

$

2,172

 

$

3,070

 

$

3,495

 

 

 

 

23%

 

 

trivago

 

 

 

237

 

 

251

 

 

279

 

 

171

 

 

 

 

 

154

 

 

18

 

 

70

 

 

38

 

 

 

 

 

46

 

 

115

 

 

163

 

 

99

 

 

 

 

 

116

 

 

154

 

 

185

 

 

 

 

13%

 

 

Intercompany eliminations

 

 

 

(85

)

 

(88

)

 

(89

)

 

(54

)

 

 

 

 

(51

)

 

(3

)

 

(15

)

 

(6

)

 

 

 

 

(9

)

 

(24

)

 

(42

)

 

(31

)

 

 

 

 

(39

)

 

(43

)

 

(61

)

 

 

 

47%

 

 

Total

 

 

$

2,609

 

$

3,153

 

$

3,558

 

$

2,747

 

 

 

 

$

2,209

 

$

566

 

$

1,504

 

$

920

 

 

 

 

$

1,246

 

$

2,111

 

$

2,962

 

$

2,279

 

 

 

 

$

2,249

 

$

3,181

 

$

3,619

 

 

 

 

22%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

U.S. points of sale

 

 

$

1,476

 

$

1,838

 

$

1,982

 

$

1,573

 

 

 

 

$

1,317

 

$

463

 

$

1,033

 

$

698

 

 

 

 

$

1,001

 

$

1,736

 

$

2,177

 

$

1,655

 

 

 

 

$

1,656

 

$

2,208

 

$

2,358

 

 

 

 

8%

 

 

Non-U.S. points of sale

 

 

 

1,133

 

 

1,315

 

 

1,576

 

 

1,174

 

 

 

 

 

892

 

 

103

 

 

471

 

 

222

 

 

 

 

 

245

 

 

375

 

 

785

 

 

624

 

 

 

 

 

593

 

 

973

 

 

1,261

 

 

 

 

61%

 

 

Total

 

 

$

2,609

 

$

3,153

 

$

3,558

 

$

2,747

 

 

 

 

$

2,209

 

$

566

 

$

1,504

 

$

920

 

 

 

 

$

1,246

 

$

2,111

 

$

2,962

 

$

2,279

 

 

 

 

$

2,249

 

$

3,181

 

$

3,619

 

 

 

 

22%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by business model

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Agency

 

 

$

842

 

$

1,047

 

$

1,177

 

$

816

 

 

 

 

$

562

 

$

105

 

$

329

 

$

271

 

 

 

 

$

323

 

$

573

 

$

800

 

$

611

 

 

 

 

$

566

 

$

808

 

$

935

 

 

 

 

17%

 

 

Merchant

 

 

 

1,435

 

 

1,758

 

 

1,980

 

 

1,590

 

 

 

 

 

1,340

 

 

368

 

 

1,032

 

 

521

 

 

 

 

 

796

 

 

1,338

 

 

1,923

 

 

1,480

 

 

 

 

 

1,485

 

 

2,125

 

 

2,427

 

 

 

 

26%

 

 

Advertising & media and other

 

 

 

332

 

 

348

 

 

401

 

 

341

 

 

 

 

 

307

 

 

93

 

 

143

 

 

128

 

 

 

 

 

127

 

 

200

 

 

239

 

 

188

 

 

 

 

 

198

 

 

248

 

 

257

 

 

 

 

7%

 

 

Total

 

 

$

2,609

 

$

3,153

 

$

3,558

 

$

2,747

 

 

 

 

$

2,209

 

$

566

 

$

1,504

 

$

920

 

 

 

 

$

1,246

 

$

2,111

 

$

2,962

 

$

2,279

 

 

 

 

$

2,249

 

$

3,181

 

$

3,619

 

 

 

 

22%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA by segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Retail

 

 

$

208

 

$

561

 

$

889

 

$

513

 

 

 

 

$

36

 

$

(191

)

$

440

 

$

13

 

 

 

 

$

106

 

$

316

 

$

879

 

$

481

 

 

 

 

$

188

 

$

582

 

$

943

 

 

 

 

7%

 

 

B2B

 

 

 

79

 

 

135

 

 

155

 

 

101

 

 

 

 

 

32

 

 

(123

)

 

(47

)

 

(52

)

 

 

 

 

(57

)

 

(4

)

 

74

 

 

97

 

 

 

 

 

80

 

 

156

 

 

221

 

 

 

 

198%

 

 

Unallocated overhead costs

 

 

 

(135

)

 

(148

)

 

(144

)

 

(165

)

 

 

 

 

(143

)

 

(106

)

 

(96

)

 

(117

)

 

 

 

 

(103

)

 

(116

)

 

(116

)

 

(119

)

 

 

 

 

(120

)

 

(123

)

 

(119

)

 

 

 

3%

 

 

Expedia Group (excluding trivago)

 

 

$

152

 

$

548

 

$

900

 

$

449

 

 

 

 

$

(75

)

$

(420

)

$

297

 

$

(156

)

 

 

 

$

(54

)

$

196

 

$

837

 

$

459

 

 

 

 

$

148

 

$

615

 

$

1,045

 

 

 

 

25%

 

 

trivago

 

 

 

24

 

 

20

 

 

12

 

 

29

 

 

 

 

 

(1

)

 

(16

)

 

7

 

 

(4

)

 

 

 

 

(4

)

 

5

 

 

18

 

 

20

 

 

 

 

 

25

 

 

33

 

 

34

 

 

 

 

85%

 

 

Total

 

 

$

176

 

$

568

 

$

912

 

$

478

 

 

 

 

$

(76

)

$

(436

)

$

304

 

$

(160

)

 

 

 

$

(58

)

$

201

 

$

855

 

$

479

 

 

 

 

$

173

 

$

648

 

$

1,079

 

 

 

 

26%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to Expedia Group common stockholders

 

 

$

(103

)

$

183

 

$

409

 

$

76

 

 

 

 

$

(1,301

)

$

(753

)

$

(221

)

$

(412

)

 

 

 

$

(606

)

$

(301

)

$

362

 

$

276

 

 

 

 

$

(122

)

$

(185

)

$

482

 

 

 

 

33%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide lodging (merchant & agency)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Booked room nights

 

 

 

103.9

 

 

100.8

 

 

101.3

 

 

86.3

 

 

 

 

 

58.5

 

 

12.2

 

 

41.1

 

 

33.3

 

 

 

 

 

54.0

 

 

68.4

 

 

65.4

 

 

59.7

 

 

 

 

 

77.0

 

 

82.5

 

 

81.6

 

 

 

 

 

 

 

Booked room night growth

 

 

 

9

%

 

10

%

 

11

%

 

9

%

 

 

 

 

(44

)%

 

(88

)%

 

(59

)%

 

(61

)%

 

 

 

 

(8

)%

 

462

%

 

59

%

 

79

%

 

 

 

 

43

%

 

21

%

 

25

%

 

 

 

 

 

 

Booked ADR growth

 

 

 

(2

)%

 

(1

)%

 

%

 

%

 

 

 

 

(2

)%

 

(14

)%

 

2

%

 

4

%

 

 

 

 

34

%

 

49

%

 

21

%

 

23

%

 

 

 

 

4

%

 

3

%

 

5

%

 

 

 

 

 

 

Stayed room nights

 

 

 

80.8

 

 

100.1

 

 

116.5

 

 

91.6

 

 

 

 

 

69.4

 

 

19.2

 

 

48.8

 

 

36.1

 

 

 

 

 

37.1

 

 

56.6

 

 

77.8

 

 

62.9

 

 

 

 

 

56.5

 

 

79.1

 

 

93.2

 

 

 

 

 

 

 

Stayed room night growth

 

 

 

9

%

 

12

%

 

11

%

 

11

%

 

 

 

 

(14

)%

 

(81

)%

 

(58

)%

 

(61

)%

 

 

 

 

(47

)%

 

196

%

 

59

%

 

74

%

 

 

 

 

52

%

 

40

%

 

20

%

 

 

 

 

 

 

Stayed ADR growth

 

 

 

(1

)%

 

%

 

(1

)%

 

%

 

 

 

 

2

%

 

1

%

 

8

%

 

2

%

 

 

 

 

8

%

 

21

%

 

19

%

 

23

%

 

 

 

 

20

%

 

9

%

 

4

%

 

 

 

 

 

 

Revenue per night growth

 

 

 

(2

)%

 

1

%

 

%

 

(1

)%

 

 

 

 

6

%

 

15

%

 

14

%

 

6

%

 

 

 

 

10

%

 

7

%

 

17

%

 

24

%

 

 

 

 

17

%

 

12

%

 

5

%

 

 

 

 

 

 

Lodging revenue growth

 

 

 

7

%

 

12

%

 

11

%

 

9

%

 

 

 

 

(9

)%

 

(78

)%

 

(52

)%

 

(58

)%

 

 

 

 

(41

)%

 

215

%

 

87

%

 

116

%

 

 

 

 

78

%

 

57

%

 

25

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Worldwide air (merchant & agency)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tickets sold growth

 

 

 

11

%

 

10

%

 

8

%

 

%

 

 

 

 

(26

)%

 

(85

)%

 

(74

)%

 

(69

)%

 

 

 

 

(50

)%

 

299

%

 

132

%

 

92

%

 

 

 

 

48

%

 

1

%

 

(4

)%

 

 

 

 

 

 

Airfare growth

 

 

 

(1

)%

 

1

%

 

%

 

1

%

 

 

 

 

(5

)%

 

(35

)%

 

(36

)%

 

(31

)%

 

 

 

 

(26

)%

 

30

%

 

31

%

 

32

%

 

 

 

 

39

%

 

35

%

 

32

%

 

 

 

 

 

 

Revenue per ticket growth

 

 

 

(7

)%

 

(7

)%

 

(10

)%

 

(9

)%

 

 

 

 

(41

)%

 

NM

 

 

(48

)%

 

(35

)%

 

 

 

 

(10

)%

 

NM

 

 

(2

)%

 

(12

)%

 

 

 

 

1

%

 

21

%

 

69

%

 

 

 

 

 

 

Air revenue growth

 

 

 

3

%

 

2

%

 

(3

)%

 

(8

)%

 

 

 

 

(56

)%

 

NM

 

 

(87

)%

 

(80

)%

 

 

 

 

(55

)%

 

NM

 

 

128

%

 

68

%

 

 

 

 

50

%

 

22

%

 

61

%

 

 

 

 

 

 

 

Notes:

  • All comparisons are against comparable period of prior year unless otherwise noted.
  • Advertising & Media Revenue includes third party revenue from trivago. All trivago revenue is classified as Non-U.S. point of sale.
  • Corporate includes product revenue subsequent to our acquisition of Bodybuilding.com in July 26, 2019 through its sale in May 2020.
  • B2B includes Egencia through its sale in November 2021.
  • Some numbers may not add due to rounding. All percentages above and throughout this release are calculated on precise, unrounded numbers

Notes & Definitions:

Gross Bookings: Gross bookings generally represent the total retail value of transactions booked, recorded at the time of booking reflecting the total price due for travel by travelers, including taxes, fees and other charges, adjusted for cancellations and refunds.

Retail: The Retail segment, which consists of the aggregation of operating segments, provides a full range of travel and advertising services to our worldwide customers through a variety of consumer brands including: Expedia.com and Hotels.com in the United States, localized Expedia and Hotels.com websites throughout the world, Vrbo, Orbitz, Travelocity, Wotif Group, ebookers, Hotwire.com, CarRentals.com.

B2B: The B2B segment is comprised of our Expedia Business Services organization which consists of Expedia Partner Solutions, which operates private label and co-branded programs to make travel services available to leisure travelers though third-party company branded websites. Expedia Group results include Egencia through its sale on November 1, 2021.

trivago: The trivago segment generates advertising revenue primarily from sending referrals to online travel companies and travel service providers from its localized hotel metasearch websites.

Corporate: Includes unallocated corporate expenses as well as Bodybuilding.com subsequent to our acquisition in July 2019 through its sale in May 2020.

Lodging Metrics: Reported on a stayed and booked basis. Lodging consists of both merchant and agency model hotel and alternative accommodations.

Room Nights Stayed: Room nights stayed represent stayed hotel room nights and include property nights for our Retail reportable segment and stayed hotel room nights for our B2B reportable segment. Stayed hotel room nights include both merchant and agency hotel stays. Property nights, which are related to our alternative accommodation business, are reported upon the first day of stay and check-in to a property and represent the total number of nights for which a property is rented.

Room Nights Booked: Room nights booked represent booked hotel room nights and include property nights for our Retail reportable segment and booked hotel room nights for our B2B reportable segment. Booked hotel room nights include both merchant and agency hotel stays. Property nights are related to our alternative accommodation business.

Air Metrics: Reported on a booked basis and includes both merchant and agency air bookings.

Definitions of Non-GAAP Measures

Expedia Group reports Adjusted EBITDA, Adjusted Net Income (Loss), Adjusted EPS, Free Cash Flow and Adjusted Expenses (non-GAAP cost of revenue, non-GAAP selling and marketing, non-GAAP technology and content and non-GAAP general and administrative), all of which are supplemental measures to GAAP and are defined by the SEC as non-GAAP financial measures. These measures are among the primary metrics by which management evaluates the performance of the business and on which internal budgets are based. Management believes that investors should have access to the same set of tools that management uses to analyze our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP. Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS have certain limitations in that they do not take into account the impact of certain expenses to our consolidated statements of operations. We endeavor to compensate for the limitation of the non-GAAP measures presented by also providing the most directly comparable GAAP measures and descriptions of the reconciling items and adjustments to derive the non-GAAP measures. Adjusted EBITDA, Adjusted Net Income (Loss) and Adjusted EPS also exclude certain items related to transactional tax matters, which may ultimately be settled in cash. We urge investors to review the detailed disclosure regarding these matters in the Management Discussion and Analysis and Legal Proceedings sections, as well as the notes to the financial statements, included in the Company's annual and quarterly reports filed with the Securities and Exchange Commission. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The definition of Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization was revised in the fourth quarter of 2012 and in the first quarter of 2016 and the definition for Adjusted Net Income (Loss) was revised in the fourth quarters of 2010, 2011, 2012 and 2017. The definition of Adjusted Expenses was revised in the first quarter of 2014 and in the second quarter 2015.

Adjusted EBITDA is defined as net income (loss) attributable to Expedia Group adjusted for:

(1) net income (loss) attributable to non-controlling interests;

(2) provision for income taxes;

(3) total other expenses, net;

(4) stock-based compensation expense, including compensation expense related to certain subsidiary equity plans;

(5) acquisition-related impacts, including

(i) amortization of intangible assets and goodwill and intangible asset impairment,

(ii) gains (losses) recognized on changes in the value of contingent consideration arrangements; and

(iii) upfront consideration paid to settle employee compensation plans of the acquiree;

(6) certain other items, including restructuring;

(7) items included in legal reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g. hotel and excise taxes), related to court decisions and final settlements, and charges incurred, if any, for monies that may be required to be paid in advance of litigation in certain transactional tax proceedings;

(8) that portion of gains (losses) on revenue hedging activities that are included in other, net that relate to revenue recognized in the period; and

(9) depreciation.

The above items are excluded from our Adjusted EBITDA measure because these items are non-cash in nature, or because the amount and timing of these items is unpredictable, not driven by core operating results and renders comparisons with prior periods and competitors less meaningful. We believe Adjusted EBITDA is a useful measure for analysts and investors to evaluate our future on-going performance as this measure allows a more meaningful comparison of our performance and projected cash earnings with our historical results from prior periods and to the results of our competitors. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole and our individual business segments. In addition, we believe that by excluding certain items, such as stock-based compensation and acquisition-related impacts, Adjusted EBITDA corresponds more closely to the cash operating income generated from our business and allows investors to gain an understanding of the factors and trends affecting the ongoing cash earnings capabilities of our business, from which capital investments are made and debt is serviced.

Adjusted Net Income (Loss) generally captures all items on the statements of operations that occur in normal course operations and have been, or ultimately will be, settled in cash and is defined as net income (loss) attributable to Expedia Group plus the following items, net of tax:

(1) stock-based compensation expense, including compensation expense related to equity plans of certain subsidiaries and equity-method investments;

(2) acquisition-related impacts, including;

(i) amortization of intangible assets, including as part of equity-method investments, and goodwill and intangible asset impairment;

(ii) gains (losses) recognized on changes in the value of contingent consideration arrangements;

(iii) upfront consideration paid to settle employee compensation plans of the acquiree; and

(iv) gains (losses) recognized on non-controlling investment basis adjustments when we acquire or lose controlling interests;

(3) currency gains or losses on U.S. dollar denominated cash;

(4) since adoption of new accounting guidance in the first quarter of 2018, the changes in fair value of equity investments;

(5) certain other items, including restructuring charges;

(6) items included in legal reserves, occupancy tax and other, which includes reserves for potential settlement of issues related to transactional taxes (e.g., hotel occupancy and excise taxes), related court decisions and final settlements, and charges incurred, if any, for monies that may be required to be paid in advance of litigation in certain transactional tax proceedings, including as part of equity method investments;

(7) discontinued operations;

(8) the non-controlling interest impact of the aforementioned adjustment items; and

(9) unrealized gains (losses) on revenue hedging activities that are included in other, net.

Adjusted Net Income (Loss) includes preferred share dividends. We believe Adjusted Net Income (Loss) is useful to investors because it represents Expedia Group's combined results, taking into account depreciation, which management believes is an ongoing cost of doing business, but excluding the impact of certain expenses and items not directly tied to the core operations of our businesses.

Adjusted EPS is defined as Adjusted Net Income (Loss) divided by adjusted weighted average shares outstanding, which, when applicable, include dilution from our convertible debt instruments per the treasury stock method for Adjusted EPS. The treasury stock method assumes we would elect to settle the principal amount of the debt for cash and the conversion premium for shares. If the conversion prices for such instruments exceed our average stock price for the period, the instruments generally would have no impact to adjusted weighted average shares outstanding. This differs from the GAAP method for dilution from our convertible debt instruments, which include them on an if-converted method. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, Expedia Group's consolidated results, taking into account depreciation, which we believe is an ongoing cost of doing business, as well as other items which are not allocated to the operating businesses such as interest expense, taxes, foreign exchange gains or losses, and minority interest, but excluding the effects of certain expenses not directly tied to the core operations of our businesses. Adjusted Net Income (Loss) and Adjusted EPS have similar limitations as Adjusted EBITDA. In addition, Adjusted Net Income (Loss) does not include all items that affect our net income (loss) and net income (loss) per share for the period. Therefore, we think it is important to evaluate these measures along with our consolidated statements of operations.

Free Cash Flow is defined as net cash flow provided by operating activities less capital expenditures. Management believes Free Cash Flow is useful to investors because it represents the operating cash flow that our operating businesses generate, less capital expenditures but before taking into account other cash movements that are not directly tied to the core operations of our businesses, such as financing activities, foreign exchange or certain investing activities. We added additional detail for the capital expenditures associated with building our new headquarters facility in Seattle, Washington. We believe separating out capital expenditures for this discrete project is important to provide additional transparency to investors related to operating versus project-related capital expenditures. Free Cash Flow has certain limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent the residual cash flow for discretionary expenditures. Therefore, it is important to evaluate Free Cash Flow along with the consolidated statements of cash flows.

Adjusted Expenses (cost of revenue, selling and marketing, technology and content and general and administrative expenses) exclude stock-based compensation related to expenses for stock options, restricted stock units and other equity compensation under applicable stock-based compensation accounting standards. Expedia Group excludes stock-based compensation from these measures primarily because they are non-cash expenses that we do not believe are necessarily reflective of our ongoing cash operating expenses and cash operating income. Moreover, because of varying available valuation methodologies, subjective assumptions and the variety of award types that companies can use when adopting applicable stock-based compensation accounting standards, management believes that providing non-GAAP financial measures that exclude stock-based compensation allows investors to make meaningful comparisons between our recurring core business operating results and those of other companies, as well as providing management with an important tool for financial operational decision making and for evaluating our own recurring core business operating results over different periods of time. There are certain limitations in using financial measures that do not take into account stock-based compensation, including the fact that stock-based compensation is a recurring expense and a valued part of employees' compensation. Therefore, it is important to evaluate both our GAAP and non-GAAP measures. See the Notes to the Consolidated Statements of Operations for stock-based compensation by line item.

Expedia Group, Inc. (excluding trivago) In order to provide increased transparency on the transaction-based component of the business, Expedia Group is reporting results both in total and excluding trivago.

In addition, we evaluate certain operating and financial measures, including revenue growth, on both an as-reported and excluding the impact of foreign exchange, FX neutral, basis. FX neutral results are among the primary metrics by which management evaluates the performance of the business and management believes that investors should have access to the same set of tools that management uses to analyze our results. We estimate FX neutral revenue growth by (i) excluding the FX impacts resulting from the time period between a transaction's booking date and revenue recognition date for both the current and prior year periods, and (ii) converting our current-year period results for transactions recorded in currencies other than U.S. Dollars using the corresponding prior-year period exchange rates rather than the current-year period exchange rates.

Tabular Reconciliations for Non-GAAP Measures

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization) by Segment(1)

 

Three months ended September 30, 2022

 

Retail

 

B2B

 

trivago

 

Corporate &

Eliminations

 

Total

 

(In millions)

Operating income (loss)

$

827

 

 

$

205

 

 

$

32

 

$

(317

)

 

$

747

 

Realized gain (loss) on revenue hedges

 

(10

)

 

 

(6

)

 

 

 

 

 

 

 

 

(16

)

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

97

 

 

 

97

 

Amortization of intangible assets

 

 

 

 

 

 

 

 

 

 

23

 

 

 

23

 

Depreciation

 

126

 

 

 

22

 

 

 

2

 

 

 

26

 

 

 

176

 

Impairment of intangible assets

 

 

 

 

 

 

 

 

 

 

52

 

 

 

52

 

Adjusted EBITDA(1)

$

943

 

 

$

221

 

 

$

34

 

 

$

(119

)

 

$

1,079

 

 

 

Three months ended September 30, 2021

 

Retail

 

B2B

 

trivago

 

Corporate &

Eliminations

 

Total

 

(In millions)

Operating income (loss)

$

757

 

 

$

50

 

 

$

15

 

 

$

(298

)

 

$

524

 

Realized gain (loss) on revenue hedges

 

(8

)

 

 

 

 

 

 

 

 

 

 

 

(8

)

Restructuring and related reorganization charges

 

 

 

 

 

 

 

 

 

 

12

 

 

 

12

 

Legal reserves, occupancy tax and other

 

 

 

 

 

 

 

 

 

 

10

 

 

 

10

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

116

 

 

 

116

 

Amortization of intangible assets

 

 

 

 

 

 

 

 

 

 

24

 

 

 

24

 

Depreciation

 

130

 

 

 

24

 

 

 

3

 

 

 

20

 

 

 

177

 

Adjusted EBITDA(1)

$

879

 

 

$

74

 

 

$

18

 

 

$

(116

)

 

$

855

 

 

(1) Adjusted EBITDA for our Retail and B2B segments includes allocations of certain expenses, primarily cost of revenue and facilities, the total costs of our global travel supply organizations, the majority of platform and marketplace technology costs, and the realized foreign currency gains or losses related to the forward contracts hedging a component of our net merchant lodging revenue. We base the allocations primarily on transaction volumes and other usage metrics. We do not allocate certain shared expenses such as accounting, human resources, certain information technology and legal to our reportable segments. We include these expenses in Corporate and Eliminations. Our allocation methodology is periodically evaluated and may change.

Adjusted EBITDA (Adjusted Earnings Before Interest, Taxes, Depreciation & Amortization)

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(In millions)

Net income (loss) attributable to Expedia Group, Inc.

 

$

482

 

 

$

376

 

 

$

175

 

 

$

(374

)

Net income (loss) attributable to non-controlling interests

 

 

(6

)

 

 

2

 

 

 

(7

)

 

 

(6

)

Provision for income taxes

 

 

214

 

 

 

87

 

 

 

187

 

 

 

(129

)

Total other expense, net

 

 

57

 

 

 

59

 

 

 

602

 

 

 

532

 

Operating income

 

 

747

 

 

 

524

 

 

 

957

 

 

 

23

 

Gain (loss) on revenue hedges related to revenue recognized

 

 

(16

)

 

 

(8

)

 

 

(34

)

 

 

(14

)

Restructuring and related reorganization charges

 

 

 

 

 

12

 

 

 

 

 

 

54

 

Legal reserves, occupancy tax and other

 

 

 

 

 

10

 

 

 

23

 

 

 

1

 

Stock-based compensation

 

 

97

 

 

 

116

 

 

 

280

 

 

 

319

 

Depreciation and amortization

 

 

199

 

 

 

201

 

 

 

593

 

 

 

615

 

Impairment of intangible assets

 

 

52

 

 

 

 

 

 

81

 

 

 

 

Adjusted EBITDA

 

$

1,079

 

 

$

855

 

 

$

1,900

 

 

$

998

 

Adjusted Net Income (Loss) & Adjusted EPS

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(In millions, except share and per share data)

Net income (loss) attributable to Expedia Group, Inc.

 

$

482

 

 

$

376

 

 

$

175

 

 

$

(374

)

Less: Net (income) loss attributable to non-controlling interests

 

 

6

 

 

 

(2

)

 

 

7

 

 

 

6

 

Less: Provision for income taxes

 

 

(214

)

 

 

(87

)

 

 

(187

)

 

 

129

 

Income (loss) before income taxes

 

 

690

 

 

 

465

 

 

 

355

 

 

 

(509

)

Amortization of intangible assets

 

 

23

 

 

 

24

 

 

 

66

 

 

 

77

 

Stock-based compensation

 

 

97

 

 

 

116

 

 

 

280

 

 

 

319

 

Legal reserves, occupancy tax and other

 

 

 

 

 

10

 

 

 

23

 

 

 

1

 

Restructuring and related reorganization charges

 

 

 

 

 

12

 

 

 

 

 

 

54

 

Impairment of intangible assets

 

 

52

 

 

 

 

 

 

81

 

 

 

 

Unrealized (gain) loss on revenue hedges

 

 

(9

)

 

 

(3

)

 

 

(15

)

 

 

(5

)

Loss on minority equity investments, net

 

 

71

 

 

 

11

 

 

 

423

 

 

 

7

 

(Gain) loss on debt extinguishment, net

 

 

(73

)

 

 

 

 

 

(49

)

 

 

280

 

Gain on sale of business, net

 

 

 

 

 

(54

)

 

 

(2

)

 

 

(55

)

Adjusted income before income taxes

 

 

851

 

 

 

581

 

 

 

1,162

 

 

 

169

 

 

 

 

 

 

 

 

 

 

GAAP Provision for income taxes

 

 

(214

)

 

 

(87

)

 

 

(187

)

 

 

129

 

Provision for income taxes for adjustments

 

 

12

 

 

 

78

 

 

 

(74

)

 

 

(144

)

Total Adjusted provision for income taxes

 

 

(202

)

 

 

(9

)

 

 

(261

)

 

 

(15

)

Total Adjusted income tax rate

 

 

23.7

%

 

 

1.5

%

 

 

22.5

%

 

 

8.8

%

 

 

 

 

 

 

 

 

 

Non-controlling interests

 

 

(9

)

 

 

(5

)

 

 

(25

)

 

 

 

Preferred stock dividend

 

 

 

 

 

(14

)

 

 

 

 

 

(64

)

Adjusted net income attributable to Expedia Group, Inc.

 

$

640

 

 

$

553

 

 

$

876

 

 

$

90

 

 

 

 

 

 

 

 

 

 

GAAP diluted weighted average shares outstanding (000's)

 

 

161,829

 

 

 

160,460

 

 

 

162,495

 

 

 

148,453

 

Adjustment to dilutive securities (000's)

 

 

(3,921

)

 

 

(3,921

)

 

 

(3,921

)

 

 

7,295

 

Adjusted weighted average shares outstanding (000's)

 

 

157,908

 

 

 

156,539

 

 

 

158,574

 

 

 

155,748

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings (loss) per share

 

$

2.98

 

 

$

2.26

 

 

$

1.08

 

 

$

(3.67

)

Adjusted earnings per share attributable to Expedia Group, Inc.

 

$

4.05

 

 

$

3.53

 

 

$

5.53

 

 

$

0.58

 

 

 

 

 

 

 

 

 

 

Ex-trivago Adjusted Net Income (Loss) and Adjusted EPS

 

 

 

 

 

 

 

 

Adjusted net income attributable to Expedia Group, Inc.

 

$

640

 

 

$

553

 

 

$

876

 

 

$

90

 

Less: Adjusted net income (loss) attributable to trivago

 

 

17

 

 

 

(4

)

 

 

46

 

 

 

3

 

Adjusted net income excluding trivago

 

$

623

 

 

$

557

 

 

$

830

 

 

$

87

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share attributable to Expedia Group, Inc.

 

$

4.05

 

 

$

3.53

 

 

$

5.53

 

 

$

0.58

 

Less: Adjusted earnings (loss) per share attributable to trivago

 

 

0.11

 

 

 

(0.02

)

 

 

0.29

 

 

 

0.02

 

Adjusted earnings per share excluding trivago

 

$

3.94

 

 

$

3.56

 

 

$

5.23

 

 

$

0.56

 

Free Cash Flow

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(In millions)

Net cash provided by (used in) operating activities

 

$

(997

)

 

$

(1,221

)

 

$

3,622

 

 

$

3,463

 

Headquarters capital expenditures

 

 

 

 

 

 

 

 

 

 

 

(23

)

Non-headquarters capital expenditures

 

 

(170

)

 

 

(179

)

 

 

(485

)

 

 

(507

)

Less: Total capital expenditures

 

 

(170

)

 

 

(179

)

 

 

(485

)

 

 

(530

)

Free cash flow

 

$

(1,167

)

 

$

(1,400

)

 

$

3,137

 

 

$

2,933

 

Adjusted Expenses (Cost of revenue, selling and marketing, technology and content and general and administrative expenses)

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(In millions)

Cost of revenue

 

$

455

 

$

442

 

$

1,245

 

$

1,127

Less: stock-based compensation

 

 

4

 

 

 

6

 

 

 

10

 

 

 

17

 

Adjusted cost of revenue

 

$

451

 

 

$

436

 

 

$

1,235

 

 

$

1,110

 

Less: trivago cost of revenue(1)

 

 

5

 

 

 

6

 

 

 

13

 

 

 

13

 

Adjusted cost of revenue excluding trivago

 

$

446

 

 

$

430

 

 

$

1,222

 

 

$

1,097

 

 

 

 

 

 

 

 

 

 

Selling and marketing expense

 

$

1,669

 

 

$

1,314

 

 

$

4,724

 

 

$

3,177

 

Less: stock-based compensation

 

 

18

 

 

 

29

 

 

 

50

 

 

 

78

 

Adjusted selling and marketing expense

 

$

1,651

 

 

$

1,285

 

 

$

4,674

 

 

$

3,099

 

Less: trivago selling and marketing expense(1)(2)

 

 

68

 

 

 

80

 

 

 

148

 

 

 

158

 

Adjusted selling and marketing expense excluding trivago

 

$

1,583

 

 

$

1,205

 

 

$

4,526

 

 

$

2,941

 

 

 

 

 

 

 

 

 

 

Technology and content expense

 

$

310

 

 

$

277

 

 

$

864

 

 

$

800

 

Less: stock-based compensation

 

 

28

 

 

 

32

 

 

 

82

 

 

 

91

 

Adjusted technology and content expense

 

$

282

 

 

$

245

 

 

$

782

 

 

$

709

 

Less: trivago technology and content expense(1)

 

 

11

 

 

 

12

 

 

 

36

 

 

 

37

 

Adjusted technology and content expense excluding trivago

 

$

271

 

 

$

233

 

 

$

746

 

 

$

672

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

$

187

 

 

$

182

 

 

$

562

 

 

$

522

 

Less: stock-based compensation

 

 

47

 

 

 

49

 

 

 

138

 

 

 

133

 

Adjusted general and administrative expense

 

$

140

 

 

$

133

 

 

$

424

 

 

$

389

 

Less: trivago general and administrative expense(1)

 

 

7

 

 

 

6

 

 

 

23

 

 

 

21

 

Adjusted general and administrative expense excluding trivago

 

$

133

 

 

$

127

 

 

$

401

 

 

$

368

 

 

Note: Some numbers may not add due to rounding.

(1) trivago amount presented without stock-based compensation as those are included with the consolidated totals above.

(2) Selling and marketing expense adjusted to add back Retail spend on trivago eliminated in consolidation.

Conference Call

Expedia Group, Inc. will webcast a conference call to discuss third quarter 2022 financial results and certain forward-looking information on Thursday, November 3, 2022 at 1:30 p.m. Pacific Time (PT). The webcast will be open to the public and available via ir.expediagroup.com. Expedia Group expects to maintain access to the webcast on the IR website for approximately three months subsequent to the initial broadcast.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This release may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. These forward-looking statements are based on assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. The use of words such as “believe,” “estimate,” “expect” and “will,” or the negative of these terms or other similar expressions, among others, generally identify forward-looking statements. However, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements and may include statements relating to future revenues, expenses, margins, profitability, net income (loss), earnings per share and other measures of results of operations and the prospects for future growth of Expedia Group, Inc.’s business. Actual results may differ materially from the results predicted and reported results should not be considered as an indication of future performance. The potential risks and uncertainties that could cause actual results to differ from the results predicted include, among others, those described in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed periodic reports on Form 10-K and Form 10-Q, which are available on our investor relations website at ir.expediagroup.com and on the SEC website at www.sec.gov. All information provided in this release is as of November 3, 2022. Undue reliance should not be placed on forward-looking statements in this release, which are based on information available to us on the date hereof. We undertake no duty to update this information unless required by law.

About Expedia Group

Expedia Group, Inc. (NASDAQ: EXPE) companies power travel for everyone, everywhere through our global platform. Driven by the core belief that travel is a force for good, we help people experience the world in new ways and build lasting connections. We provide industry-leading technology solutions to fuel partner growth and success, while facilitating memorable experiences for travelers. Our organization is made up of three pillars: Expedia Product & Technology, focused on the group’s product and technical strategy and offerings; Expedia Brands, housing all our consumer brands; and Expedia for Business, consisting of business-to-business solutions and relationships throughout the travel ecosystem. The Expedia Group family of brands includes: Expedia®, Hotels.com®, Expedia® Partner Solutions, Vrbo®, trivago®, Orbitz®, Travelocity®, Hotwire®, Wotif®, ebookers®, CheapTickets®, Expedia Group™ Media Solutions, CarRentals.com™, and Expedia Cruises™.

© 2022 Expedia, Inc., an Expedia Group company. All rights reserved. Trademarks and logos are the property of their respective owners. CST: 2029030-50

Investor Relations ir@expediagroup.com

Communications press@expediagroup.com

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